U.S. Postal Service scraps new delivery plan

Thursday, April 11, 2013

The U.S. Postal Service scrapped its plan, for now, to save $2 billion annually by eliminating Saturday mail delivery during a meeting of its board of governors Tuesday.
The move is a reaction to Congress’ passage of a continuing resolution that prohibits the new service plan, which was to include mail service only on weekdays starting in August. Under the Postal Service’s plan, packages would still be delivered on Saturdays.
In the wake of the delay, the board of governors has directed postal officials to start negotiations with unions to lower workforce costs. USPS officials are also looking into rate increases and other revenue-generating options, according to a statement by the USPS.
The Postal Service doesn’t consider its plan dead, but is rather waiting until Congress passes legislation that gives the government-run USPS more authority over its daily structure. According to the statement, the board of governors ruled to delay the delivery-structure change because it didn’t have a choice.
“Although disappointed with this congressional action, the board will follow the law and has directed the Postal Service to delay implementation of its new delivery schedule until legislation is passed that provides the Postal Service with the authority to implement a financially appropriate and responsible delivery schedule,” according to the statement. “The board believes that Congress has left it with no choice but to delay this implementation at this time."
Officials said the new delivery schedule is an integral part of its five-year strategy to put the post office back on the correct fiscal path. Board members allege it simply isn’t possible to effect enough fiscal change without reorganizing the delivery strategy.
USPS turned in a year-end loss of $15.9 billion in 2012, $11.1 billion of which were mandated payments to the U.S. Treasury on which the organization defaulted. To lessen the financial blow, USPS has continued to cut retail, delivery and processing services in an effort that has reduced its annual cost base by $15 billion since 2006. In that same period, USPS’ workforce has been winnowed down by 24 percent.
In January, a report by the U.S. Office of the Inspector General found the postal service could generate $17.4 million in additional revenue in 2013 and 2014 by focusing on government contracts which are currently held by FedEx and UPS. The report found two years ago the government spent a total of $342.6 million in shipping services, with FedEx accounting for $205.2 million and UPS generating $131.7 million in revenue. USPS earned $1.2 million. The Postal Service’s government revenue ascended to $4.8 million in 2012, still far off pace from FedEx’s $190.1 million and UPS’ $138.7 million.
Last month, Postmaster General Pat Donahoe said the mail sector needs to make mail more personally relevant, actionable, functional – here, he talked about imbedding new technology in mail – and creative in order to regain its foothold.
“Mail is an incredibly strong way of communicating today, and to stay ahead in a changing world, we need to continually strengthen the mail experience,” he said during the opening speech at the National Postal Forum in San Francisco. “These are exciting times to be in the mail, and now is the time to think about the business opportunities that will come taking mail to the next level." - Jon Ross